A federal judge in California has blocked the Trump administration from designating Anthropic as a supply chain risk to national security and cutting off the AI company’s work with federal agencies.
Anthropic sued the Defense Department and other federal agencies this month after the Pentagon labeled it a "supply-chain risk to national security." President Donald Trump said he would also ban the use of Anthropic’s products across other federal agencies.
“Defendants’ designation of Anthropic as a 'supply chain risk' is likely both contrary to law and arbitrary and capricious,” U.S. District Judge Rita Lin of Northern California wrote in her order Thursday night. “The Department of War provides no legitimate basis to infer from Anthropic’s forthright insistence on usage restrictions that it might become a saboteur.”
Lin paused her order for a week to allow the administration time to appeal.
The Defense Department and the White House did not immediately respond to a request for comment Thursday evening.
“We’re grateful to the court for moving swiftly, and pleased they agree Anthropic is likely to succeed on the merits," an Anthropic spokesperson said in a statement Thursday. "While this case was necessary to protect Anthropic, our customers, and our partners, our focus remains on working productively with the government to ensure all Americans benefit from safe, reliable AI."
The supply chain risk designation requires the Pentagon and its contractors to stop using Anthropic's commercial AI services for all defense business.
Defense Secretary Pete Hegseth said on X in late February that he was issuing a directive to give the company the "supply chain risk" label. Trump also said he was ordering all federal agencies, including the Treasury and State departments, to cease using Anthropic's AI technology.
“The record reflects that the Challenged Actions were taken without any meaningful notice or pre-deprivation process (and, in the case of the Presidential Directive and the Hegseth Directive, without any post-deprivation process either),” Lin wrote in her order.
The order Thursday also bars other agencies from cutting off their work with Anthropic. Lin wrote that the order restores the status quo.
“This Order does not require the Department of War to use Anthropic’s products or services and does not prevent the Department of War from transitioning to other artificial intelligence providers, so long as those actions are consistent with applicable regulations, statutes, and constitutional provisions,” the order said.
Anthropic filed two lawsuits against the Defense Department — one in U.S. District Court for Northern California and the other in U.S. Circuit Court of Appeals for Washington, D.C. — alleging that the federal government’s moves go beyond a normal contract dispute and instead are an “unlawful campaign of retaliation” that followed months of heated negotiations about how the military should be able to use Anthropic’s AI systems.
Anthropic had sought stronger guarantees that the Pentagon would not use its AI systems for autonomous weapons or mass domestic surveillance.
Anthropic is the creator of the Claude chatbot system and the only AI company whose services were cleared for use on the Defense Department’s classified networks.
Hours after Hegseth’s announcement last month, OpenAI CEO Sam Altman said his company had reached an agreement with the Pentagon to use its services in classified settings.
Lin wrote: "Although Anthropic was on notice that the government objected to its contracting terms, it had no notice or opportunity to object before Defendants publicly barred it from all federal government work and blacklisted it with private companies working with the U.S. military. It also had no notice or opportunity to object to the factual basis for its designation as a supply chain risk, which it learned of in this litigation."
